Question
During 2019,Waterway Industriesintroduced a new line of machines that carry a three-year warranty against manufacturer's defects. Based on industry experience, warranty costs are estimated at
During 2019,Waterway Industriesintroduced a new line of machines that carry a three-year warranty against manufacturer's defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 3% in the year after sale, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: (assume the accrual method)
Sales Actual Warranty Expenditures
2019 $1,607,000 $41,000
2020 $2,495,000 $67000
2021 $2,100,000 $133,000
Total $6,202,000 $241,000
What amount shouldWaterwayreport as a liability at December 31, 2021?
$68720
$317180
$84000
$0
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